A familiar AUD pattern set up as the UK session got underway. When there is a large move during the Asian session, after major economic news releases, I like to watch for signs that the UK traders will reverse the move. The run up and pull back above the Asian session highs to lure in breakout traders is called a “wash and rinse”. Once this completes, watch for signs of the real move – once the orders have been accumulated.
With a stop loss above the session high of 10 pips, if price makes it to the Asian session low, the Reward to Risk ratio is 5:1. If price makes it to yesterday’s low, it’s still a 4:1 R/R. With a small stop loss and a large potential reward, an entry short is taken.
As price moves down, we move our profit stop down to lock in pips at structure or for a set amount of pips.
Buyers subsequently enter near an area that was a spike low during the Asian session. At this point we tighten our profit stop further and get closed out shortly afterward.
Good luck with your trading!
It is a shorter trading week for us as we don’t trade NFP Fridays.
Back tomorrow if we find a trade.
